When a partner retires from a firm and the amount due to him is not paid immediately, to which account is the total amount of his Capital A/c, after all adjustments, transferred by the firm?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → To his Loan A/c
The amount due to a retiring partner is worked out after all adjustments. If the firm cannot pay it at once, it is transferred to his Loan Account, and each later payment is debited to that account.
Option (1) As carrying forward to his Capital A/c — Incorrect. His capital account is closed, because he is no longer a partner.
Option (2) To his Current A/c — Incorrect. A current account belongs to a continuing partner under the fixed capital method.
Option (4) To his Executor's A/c — Incorrect. The executor’s account is used when a partner dies, not when he retires.
NCERT (2026-27 edition): |